The author of a new HealthGrades study of bariatric surgery says the wild disparity in cost and quality for the procedures provide a good example of the "twisted market" that often drives elective medicine.

The HealthGrades study of 153,355 bariatric surgeries in 19 states found that, even though the majority of bariatric surgeries are elective, there is little evidence that consumers are demanding a better product at a lower price. The disregard for price may account for the eye-popping disparities in cost and outcomes.

Bariatric surgery in California costs on average about $52,224, and about $14,577 in Maryland, while bariatric surgery patients treated at top-rated hospitals have, on average a 67% lower chance of experiencing serious complications compared to patients who receive treatment at poorly rated hospitals.

May says the study illustrates a key cost driver for the nation's healthcare delivery—the lack of incentive among insured consumers to keep their own healthcare costs low.

"The purchaser who is going out and selecting the provider and the procedure is not the person putting out most of the money. Because of that, it drives a really twisted market," May says. "You are seeing it across healthcare. When you have consumers who are able to select their healthcare with little impact on what they pay, they're like anybody. If you could buy a car and somebody else was going to cover 90% of the cost, you are probably going to buy an Escalade. But if you are paying more of the cost, you will be much more discriminating and realistic about what you purchase."

Another dictum of the free market—you get what you pay for—is also challenged in the HealthGrades study, which found that higher costs don't translate into better outcomes; quite the opposite, in fact.

"There is a correlation, but it's an inverse correlation," May says. "The more expensive places for bariatric surgery tend to have higher complications."

That makes sense when you consider that bad outcomes increase costs. May says the biggest driver of outcomes is experience. HealthGrades found that high bariatric surgery volumes correlate with better outcomes. Hospitals with more than 375 bariatric cases in three years had a 32% lower risk of in-patient complications than lower-volume hospitals with less than 75 cases over three years.

Eight years ago, Tennessee Gov. Phil Bredesen successfully campaigned on his pledge to fix TennCare or end it. Since then, the governor has steered the state?s public healthcare program through the most...

Periodically, a dramatic change in an industry enables chief information officers to step up and play a decisive role in corporate affairs. We see such a seismic shift in the U.S. health insurance industry...